The First Colorful Life Of Property May Come To An End When Self-Help Is Going On In The New Year

One month ago, at the performance conference of colorful life, Pan Jun, chairman and CEO of color life, also said that he wanted to "rejuvenate the vitality of the first share of property". Unexpectedly, a month later, the "property first share" which once enjoyed unlimited fame and fortune would become lonely.

On the evening of September 28, Country Garden Service holdings announced that country garden property Hong Kong Holdings and color life services signed an equity transfer agreement to acquire 100% of the shares of color life's neighborhood Holding Group Co., Ltd. at a total price of no more than 3.3 billion yuan. After the completion of the transaction, country garden will hold almost all the core assets of color life.

This may be a turning point in the development of color life.

Caisheng landed on the Hong Kong Stock Exchange in 2014. Its parent company is huaqiannian, which was founded by Zeng Baobao. At the beginning of its listing, color life's story tailor-made for the capital market once made its market value soar and become the favorite of the capital market. However, in the past seven years of listing, Caisheng has experienced many poor mergers and acquisitions. After many strategic adjustments, it is still difficult to break through the bottleneck and its performance growth has stagnated.

At this delicate point in time, the parent company of colorful life, huashinian, also suffers from turbulence. Its assets are still valued, but it has to go on the road of "selling out to save the life".

Property. IC photo

Selling oneself

In the view of the industry, the transfer of core assets to country garden service is a fair price transaction.

According to the country garden service announcement, as of June 30, 2021, the uncensored comprehensive net asset value of neighborhood is about 1.374 billion yuan. By the end of 2020, neighborhood music has recorded a profit of about 412 million yuan before tax and about 309 million yuan after tax. Based on this calculation, the valuation of country garden services to acquire neighborhood music is no more than 11 times PE.

At present, the total market value of color life is only about HK $3.7 billion, and the P / E ratio is about 6.14 times PE. Compared with other head companies, this valuation belongs to a lower level. Baiwenxi, IPG's chief economist in China, told reporters of the 21st century economic report that the price was relatively fair, "because color life is originally a listed property management company, and its transaction valuation is based on the market transaction price."

Country garden services set up the installment payment method for the transaction. According to the announcement, Country Garden Property Hong Kong will make three payments in the form of its own funds, equity financing and loans, and each period has its own payment conditions.

People close to color life told 21st century economic report that the deal had been discussed for several months. Country garden service also bought the most valuable commercial assets of color life, such as Vientiane property and Kaiyuan International.

A person familiar with country garden service also analyzed that "the part purchased by country garden service is commercial service. According to the service style of country garden, it will not buy other assets."

In recent years, due to the lack of post investment management after M & A, the basic service level seems to be the most criticized aspect, which also affects the performance of lottery life in the capital market to a certain extent.

Since 2019, color life has made many management changes and strategic adjustments. At the 2020 performance meeting, Pan Jun reported that the overall work has been basically completed through one and a half years of adjustment, including streamlining the management structure, adjusting the business development strategy, optimizing the salary and incentive mechanism.

At the performance meeting in the middle of this year, Pan Jun once again reiterated that color life is the company with the largest number of acquisitions in the property industry. Up to now, there are more than 200 property companies acquiring M & A. After a year and a half of integration, the company can enter into some corresponding third-party business development in the future and return to the growth track. "In the future, color life will moderately focus on acquisition and merger, and the corresponding scale of the company will also be moderately expanded." however, under the drastic adjustment, color life has not ushered in rapid development. According to the mid-term performance announcement of color life in 2021, the company realized a revenue of about 1.792.2 billion yuan, a year-on-year increase of about 0.75%, lower than the average growth rate of the industry's revenue; The gross profit was 534 million yuan, up 0.43% year on year. Although the revenue from the decline to rise, but the increase is still small, weak growth. During the period, the area under management was 553.1 million square meters, with a year-on-year increase of 0.26%, which was far lower than that of other top property enterprises.

savior

The background of Caisheng's core assets transfer is that the situation of its parent company in huashinian is not optimistic.

Bai Wenxi said in an interview with the 21st century economic report that "the main reason for the sale of core assets by color life is that the parent company is facing greater liquidity pressure, and its assets that can be quickly realized and have relatively strong liquidity are also color life property plate."

At present, the company's performance is declining and the debt is toppling. Bai Wenxi said, "the industry status and scale of huayannian are not very dominant, and the financial situation is not very optimistic, so the future development pressure of flower year is still very big."

According to the annual report in 2021, a number of performance data in the year of flower show a decline and weak development. In the first half of this year, in terms of sales, the accumulated sales of fancy pattern year amounted to 28.12 billion yuan, less than half of the target of 60 billion yuan in 2021. In terms of revenue, the annual gross profit of Huashi was 2.277 billion yuan, down 26.75% from the same period last year; The gross profit rate was about 20.8%, down 38% year on year; The net interest rate was 2.77%, down 7.58% year on year.

At the same time of revenue decline, huashinian's debt situation is not optimistic. According to the statistics of Shell Research Institute, the asset liability ratio, net debt ratio and cash short debt ratio after excluding advance collection are 72.7%, 74.8% and 1.59 respectively. One of the "three red lines" is "yellow". At the same time, the company has loans of about 16.85 billion yuan, preferred notes and bonds of 34.37 billion yuan and asset-backed securities of about 268 million yuan, with a total loan of 51.5 billion yuan, an increase of about 10% compared with 2020.

In this context, huabiannian has been downgraded by international rating agencies such as standard & Poor's, Fitch and moody's.

According to S & P statistics, in the sample year, there are about $762 million of senior unsecured bonds due in the rest of 2021, US $1.15 billion in bonds due in 2022, and about $1.7 billion in domestic bonds due or resold in November and December, and about $3.5 billion in trust loans due within one year. "The negative ratings of the three international institutions mean the deterioration of corporate liquidity and the decline of solvency, as well as the increased risk and difficulty of financing in the open market," Bai Wenxi said

It is not that the management did not foresee such a situation. Prior to this, Pan Jun, chairman and chief executive officer of huaqiannian, publicly said that if the policy environment did not improve in June next year, sales would continue to decline, and 60% of private enterprise developers might face bankruptcy.

At the performance conference in the middle of this year, management also said that the company was dealing with heavy assets, including long-term investment projects. "Last time I met with investors, I also talked about these actions, such as the disposal of some shopping malls and hotels, which will only reduce debt and increase cash flow for the company's future operation. At present, several commercial projects are going smoothly."

From the behavior of selling core assets of colorful life, huashannian's self-help is relatively positive. But now the real estate industry is in the cycle of frequent changes, many of the situation is not accurate enough to predict the fate of real estate enterprises will eventually have to change.